Monday, February 13, 2012

My Favorite Airline Fee and Other Spirit Airlines Thoughts

Spirit Airlines (the Ryanair of North America) has a business model around low fares plus fees for everything. I find this model interesting so I read through the Spirit Airlines fees table and found some interesting entries.  

Unintended Consequences of DOT Regulations Fee - $2.00 per customer, each way.  This is my favorite airline fee.  The Department of Transportation (DOT) has been messing with Spirit's business model at almost every turn by adding new regulations in response to Spirit's actions.  The DOT is also adding requirements that eat into Spirit's profits, like the tarmac delay rule.  Regulations add costs, even if the DOT doesn't admit it, so Spirit is highlighting those costs to all passengers with this $2 fee.  It's a brilliant fee because it brings attention to all the problems the DOT rules create.  Other airlines have to pay these costs too, but roll it into the ticket price.  If all carriers broke out the DOT costs from fare costs, it could force the DOT to remove some (unnecessary) burdens on carriers.    

Charge for printing Boarding Passes at Kiosk (fee starts 30 June 2012) - $2.00 per boarding pass printed.  This is very Ryanair of Spirit, a complement to them.  They are removing more and more costs from their responsibility to the customer.  This keeps fares low and sells more seats.  Spirit has this fee to discourage the behavior, not just to make cash from fees.  Fewer kiosks means lower costs.

Carry-On Bag: At Booking / before check-in $20-$35, Airport Counter/Kiosk purchase $40, Gate $45.  This was the biggest fee in the news since Spirit started charging for the first checked bag, now a standard practice.  Spirit started charging for checked bags and everyone started carrying on.  This forced longer times on the ground to gate check all the bags that would not fit.  This time on the ground was expensive and Spirit found it could be avoided by charging more to carry on a bag than check one.  Problem solved and revenue increased, an elegant solution.  

I have never flown Spirit Airlines, and I don't have any plans to fly them in the future.  If they start service to Denver, I will give them a look, but that seems unlikely.  They are a fun airline to follow and are making a (economically) sustainable business model as an airline.

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